The continuity-of-interest doctrine is designed to prevent sales from being treated as nontaxable reorganizations.

Question

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The continuity-of-interest doctrine requires that owners of a selling corporation must continue to hold a significant ownership interest in the acquiring corporation in order for the sale to be treated as a nontaxable reorganization. This prevents owners from simply selling their shares and avoiding tax liability.

The Continuity-Of-Interest Doctrine Is Designed to Prevent Sales from Being